Download MKT 201 Marketing Principles Prof. John Stockmyer

Market Segmentation,
Targeting and Positioning
chapter 5
Ch. 5 Objectives
• Understand the concepts: market
segmentation, and target marketing.
positioning
• Learn the advantages and
disadvantages of target marketing
• Discuss segmentation criteria,
strategies, and seg. bases
• Understand typical positioning
strategies
What is a market?
• Individuals or organizations
who:
– Are willing, able, and capable of
purchasing a firm’s product
– Segmentation is critical because
demand is often heterogeneous
Market Segmentation/Targeting
Market Segmentation is:
• The process of dividing up the total market
into distinct subsets of customers with
common needs or characteristics
Targeting is:
• Selecting one or more segments that are
appropriate
Target Marketing
• Advantages
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Easier analysis of potential and actual consumers
Tailoring of products to market
Assessment of demand potential
Identify competing products
Increased sales effectiveness
Target Marketing
• Disadvantages
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Increased marketing costs
More complex strategy to implement
Narrow segmentation can impact brand loyalty
Ethics and stereotyping issues
Can hinder a “Global” Brand Image
Faux segmentation may be viewed cynically
• See Excedrin Migraine:
Market Criteria
• Segmentable markets are:
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Heterogeneous
Measurable
Substantial
Actionable
• Companies must be able to respond to preferences
with an appropriate marketing mix
– Accessible
• Market must be efficiently reachable
Segmentation Variables
Demographic
Segmentation
Segmentation
Geographic
Segmentation
Situation
Segmentation
Psychographic
Behavior/Usage
Segmentation
Segmentation
Benefits-Sought
Demographics
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Age
Income
Gender
Occupation
Education
Ethnicity
Family Life Cycle
Segmentation Variables
Demographic
Segmentation
Segmentation
Geographic
Segmentation
Situation
Segmentation
Psychographic
Behavior/Usage
Segmentation
Segmentation
Benefits-Sought
Geographics
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By region of country
Micro-Beers do it
Campbell’s Soup does it
Frito-Lay does it:
Segmenting Consumer Markets
Demographic
Segmentation
Segmentation
Geographic
Segmentation
Situation
Segmentation
Psychographic
Behavior/Usage
Segmentation
Segmentation
Benefits-Sought
Psychographic Segmentation
– Grouping customers together
based on social class,
lifestyles and psychological
characteristics (attitudes,
interests and opinions)
Segmenting Consumer Markets
Demographic
Segmentation
Segmentation
Geographic
Segmentation
Situation
Segmentation
Psychographic
Behavior/Usage
Segmentation
Segmentation
Benefits-Sought
Benefits Sought
• Find (or create) a key benefit that the
product satisfies
• Toothpaste Example:
Segmenting Consumer Markets
Demographic
Segmentation
Segmentation
Geographic
Segmentation
Situation
Segmentation
Psychographic
Behavior/Usage
Segmentation
Segmentation
Benefits-Sought
Situation Segmentation
• Time of Year / Week, Event etc.
Segmenting Consumer Markets
Demographic
Segmentation
Segmentation
Geographic
Segmentation
Situation
Segmentation
Psychographic
Behavior/Usage
Segmentation
Segmentation
Benefits-Sought
Behavior/Usage Segmentation
• Markets can be segmented by how often or how
heavily consumers use a specific product
– 80/20 Principle - 80% of revenue generated by 20% of
customers
Light Users
80%
Heavy Users
20%
Behavior/Usage Segmentation
80/20 true for many products
• For Beer it’s 88% to 16%
• Who are the heavy users?
Product
Positioning
How to Position Brands:
Positioning:
• “an image that a product projects in
relation to competitive products and to
the firm’s other products”
7 Ways to Position (differentiate) a product
• Show MGD clip(s)
• How is MGD differentiated?
1) Product Attribute
• It has something that others do not have
• Whatever attributes seem important to
consumers
• Key attribute may in reality be bogus...
7 Ways to Position (differentiate) a product
• Show Kia clip
2) By Competitor
• Show Similarity
• Show Difference
7 Ways to Position (differentiate) a product
3) By Cultural Symbol (brand marks)
TV Ad.
7 Ways to Position (differentiate) a product
4) By Price / Quality
– Can be high or low (Generics)
5) By Product Class
– Different type of product/service, but provides the
same or better benefits
• Example: New AmTrak Acela service to NY
6) By Use or Application
Typically used to add uses of
product and expands user base
7 Ways to Position (differentiate) a product
7) By Product User
• Product is positioned for a particular group of users
• List some potential target markets for cellular
phones:
Product Repositioning
• What is meant by Repositioning?
• Why might a company want to do it? (4X)
• Know any products that have been
repositioned?
Mountain Dew
(The most successful re-position in history)
• What is MD’s current image/target market?
Mountain Dew
(The most successful re-position in history)
• Remember MD’s initial positioning?
(1968-Early 1970’s)
Mountain Dew
(The most successful re-position in history)
Mountain Dew
(The most successful re-position in history)
A rather unusual example of
segmentation/positioning...